The Kotler Effect
With more than 600 stores now under its watch, GPM Investments lets the industry know it’s here to stay.
What’s the difference between a venture capitalist and a convenience-store chain CEO?
For Arie Kotler, it’s five years, a marriage, kids, the U.S. financial crisis and an entirely new perspective.
“I used to be in the business of buying and selling to make a profit in a very short time. That’s still great, but I don’t believe in it anymore,” says Kotler, the owner and CEO of GPM Investments. More recently, “I was looking at something I could grow, something I could be proud of.”
Kotler’s actions back up his words. In the two years since regaining ownership of the Mid-Atlantic chain of Fas Mart and Shore Stop convenience stores, Kotler and his team have shown remarkable drive. And the team plays a significant role: With Chris Giacobone leading operations and Mark King overseeing financials, the extended team—from vice presidents to the employees in the stores—is quietly keeping the company on the cutting edge of store-count growth, operating systems, in-store programs and even the product offer. It’s a quality Giacobone stresses when working with employees, letting them know that they can make a difference at GPM.
In recent months, the company has:
- More than doubled its store count with the purchase of VPS Convenience Store Group LLC’s Southeast division of 263 sites.
- Established a Southeast division of its own to operate the former VPS stores and set up a platform for further growth in the Carolinas.
- Launched an updated foodservice program with healthier options and a refreshed coffee program.
- Launched a fuel-price-rollback debit card and loyalty program.
- Developed a reputation for selling unexpected products—e.g., baby wipes and mobile-phone contracts—in significant quantities.
CSP sat down with Kotler and his leadership team for an exclusive interview in his office in Richmond, Va., to get the lowdown on these advancements, discuss his return to GPM and find out what the future may hold for what is now the 15th largest c-store chain by store count in the country.
Back Where We Started
When Israeli businessman Kotler started GPM Investments in 2003, he took a back seat. At the time, as the 28-year-old CEO of Tel Aviv-based Arko Holdings, a venture-capital firm, Kotler saw opportunity in the U.S. c-store industry—namely, the ability to get in cheap and grow as several well-known chains (Swifty Serve, Acme, DB Marts, etc.) were entering bankruptcy and being liquidated.
He was prepared to start modestly, initially eyeing a 16-store chain.
“The purpose of the small company was to acquire through it, to make a platform to acquire more companies in this arena,” he says.
But soon he came across Fas Mart, then a down-and-out chain of 169 stores in and around Virginia that had declared bankruptcy and was in search of a new owner.
“Fas Mart was the largest bankruptcy ever in the state of Virginia,” says Kotler, who has lived in the United States since 1997. “It was a $360-million revenue company with $169 million in debt.”
It was perfect: a relatively cheap entry into a growing industry with a good mass of stores.
“We closed the deal on March 19, 2003,” Kotler recalls. “I remember that date because that was the day [the United States] went into Iraq. Fuel went through the roof; we made half a million dollars in one day.”
While consistently preaching as chairman of GPM the desire to grow the business, as well as the others in which he was invested, he allowed others—specifically David McComas, CEO at the time—to direct the company.
“We plan to acquire six or seven smaller chains with 10 to 35 units each,” McComas told CSP early in the decade. “We’ll avoid trouble this time around because there won’t be any 100% financing from lenders for roll-ups.”
And McComas did lead the company through three major acquisitions over seven years, leaving GPM in September 2010 when it owned 213 stores.
By then, Kotler had long since collected his paycheck, having sold the company in 2006.